If the Fed reduced reserve requirements,________.
A)banks would have less money to lend businesses and consumers
B)economic growth would decline
C)inflation would decline
D)interest rates would fall

Question

Quizplus · Accepted Answer

If the Fed reduces reserve requirements, banks would have more money available to lend, leading to an increase in the supply of money in circulation. This increased supply of money would lead to a decrease in interest rates as banks compete to lend money. As a result, borrowing becomes cheaper and consumers and businesses have more access to credit, which could stimulate economic growth. Additionally, lower interest rates could increase inflation, which may prompt the Fed to increase interest rates again in order to control inflation.

If the Fed Reduced Reserve Requirements,________